Unit 2 Flashcards
What is growth?
The increase in the size and status of a business
Why do businesses want to grow?
Reasons: Increase market share, maximise profits, Economies of scale, Increase notability
What is the difference and What are the +,- of a Merger and a Takeover
A merger is when two or more businesses combine often under a different name
A Takeover is when a business absorbs another taking its brand and products
Merger \+ More ideas \+ Increased market share - Disagreements - Split profits Takeover \+ Any successful brands/products are now yours \+ Faster growth/ Reduced competition -Expensive - Bad image
What are the +,- of Inorganic and organic growth?
Organic \+ Reflects success \+ Save money -harder/slower growth -Less ideas that would’ve been gained otherwise Inorganic \+ faster growth \+Reduce competition - Expensive - Can create a bad image
What are the 4 types of integration?
Horizontal Growth - buying a similar business
Backwards vertical - buying a business in which the supplies originate
Forwards vertical - buying property of other businesses
Diversification - buying an unrelated business
How is franchising a good method of growth?
+ Franchisee’s do all the work
+you get a % of profits made /Royalties
+ increases brand recognition
+ place business on the global market
How are stakeholders affected by growth
Owners- increased earnings
Workers- possible increased hours/workload
Customers- more options of where to shop
Consumers- possible better quality
What is a Plc and what is an Ltd
Plc- Public limited Company- shares open to everyone
Ltd- Private limited company- shareholders have to be invited
Both have limited liability
What are the +,- of Plc’s and ltd’s?
Plc: \+ shares are open to everyone \+ faster growth - Expensive - risk of takeover Ltd \+ pick shareholders \+ increased capital - slower way to grow - loss of profits
Explain the process of floatation
Flotation is the process of changing a private company into a public company by issuing shares and soliciting the public to purchase them.
Define aims and objectives
Aims: A realistic target a business sets to achieve in a year
Objectives: Things to do in order to achieve the aims
Why do businesses have aims and objectives?
Businesses set aims & objectives to increase motivation and productivity within the business.
Typical aims& objectives of a business
Break even Survival Grow Increase market share Increase profit margins
